Michigan Technological University, as a pass-through entity, has elected not to negotiate an indirect cost rate with a subrecipient.  I would be interested in hearing from universities who have elected not to negotiate an indirect rate with a subrecipient and would like to include a for-profit company as a sub. What solutions have you developed for working with for-profit companies who don’t have a federally-negotiated indirect cost rate and are faced with the 10% de minimus rate as the option for indirect costs?

If a company is disclosing loaded rates and is not willing to break out the rate into direct costs and indirect costs, what have been your next steps? 

Are other institutions facing this same issue?

2 CFR 200.331(a)(4) – An approved federally negotiated indirect cost rate negotiated between the subrecipient and the Federal Government or, if no such rate exists, either a rate negotiated between the pass-through entity and the subrecipient (in compliance with this part), or a de minimis indirect cost rate as defined in 200.414 Indirect (F&A) costs, paragraph (f);

§200.4141(f) - …any non-Federal entity that has never received a negotiated indirect cost rate…may elect to charge a de minimis rate of 10% [MTDC] which may be used indefinitely. [Meeting allowability requirements], costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. If chosen, this methodology must be used consistently for all Federal awards until such time as a non-Federal entity chooses to negotiate a rate, which the non-Federal entity may apply to do at any time. (emphasis added)

I appreciate your time and input. I will also post this to the FDP Subaward list.